ST MIcro's priorities to sustain analog, expand into digital

ST MIcro's priorities to sustain analog, expand into digital

NEW YORK -- If it wasn’t for the pesky $1 billion loss of business from a “significant customer” recently ST Microelectronics might be a much better financial and strategic shape.

That is according to Carlo Bozotti, ST Micro president and CEO, who was blunt in his remarks at the annual company analysts meeting here this week: “Losing the former largest customer is not sustainable.”

The “pesky” customer, Nokia, is being squeezed out by Apple and all its portable wares as more consumers are opting for anything that has a small letter “i” in front of the product name than for any other brand. “The third quarter will be better across the board than was the second quarter,” said Bozotti.

Referring to Nokia’s troubles in the mobile arena and its repercussions on ST Micro not meeting the anticipated orders for the company’s chips: “We have two priorities this year: one of continuity and one of discontinuity,” said Bozotti who wants to protect the net financial position of the company while at the same time re-design its VLSI strategy to infuse sustainability into the company’s DNA.

To that end ST Micro wants to boost its market share for their sense/power product lines while making embarking on a strategy in the digital arena with offerings in multimedia platforms. The latter has been tried by other companies before and failed, but Bozzoti thinks the “time is right for multimedia convergence applications”, which would combine its initiative in application processors and modems (ModAp) system solutions from ST Ericsson.

“We will combine ST and ST-Ericsson competencies in one team,” explained Didier Lamouche, president and CEO of ST-Ericsson. “And we chose to work with ST after evaluating four companies for the simple reason that one needs at least two years to do development with a third party.”

Lamouche said that his company is on the road to executing efficiency as a revenue lever. “We have consolidating our diverse global sites to create five hubs based on specialized technologies. Operating 44 sites around the globe becomes too much when some customers are demanding turnaround times for new phones every nine months.” He is confident that ST-Ericsson has an edge on radios for the upcoming 4G LTE phones: “Every ten years modems need to go thru a revolution. For LTE radios need to go back to square one; and we have done so earlier than our competitors, thus placing us in an advantageous market position.”

Both Bozotti and Lamouche thanked their respective teams for engaging with them on “this long and treacherous journey” at both companies.

The analyst day presentations details and webcast can be viewed here.
TAG:ST Micro Analog Digital